Analysis (Final update 3:11 p.m.)
When Chief Justice John G. Roberts, Jr., commented at the end of Monday’s first day of hearings on the health care law, “We’ll continue argument on this case tomorrow,” it seemed to have a secondary meaning even if he did not intend it. The comments and questions of the Justices during the 89-minute exchange left the distinct impression that they are prepared to rule on the constitutionality of the mandate that individuals must buy health insurance, and not push the issue off into the future. The exact route they would take was a bit uncertain, but their skepticism about taking a pass now was clear.
That did not mean, of course, that the Court would ultimately uphold the mandate. That is tomorrow’s question, although the Justices asked many questions about the mandate, showing they are deeply curious about its scope and meaning. But an argument that at times seemed almost to bog down in the dense complexity of the tax code pointed toward a refusal to bar the lawsuits that had challenged the mandate and had put its survival before the Court this week. One of the telltale signs of that sentiment was that not one Justice, and no lawyer at the lectern, said that it would be premature and a contradiction of the Court’s tradition against deciding constitutional issues prematurely for the Court to rule promptly on the mandate’s validity.
The Court had selected a Washington attorney from outside the case, Robert A. Long, Jr., to make an argument that the Supreme Court and no lower court had any authority to rule on the challenges to the mandate, on the theory that the requirement is a part of the tax code and the Anti-Injunction Act of 1867 had closed the courthouse doors to any lawsuit against a tax law before it took effect. But the most difficult questions from the bench Monday were aimed at Long’s argument. And most of the Court seemed to be leaning toward some version or variation of the argument made by Solicitor General Donald B. Verrilli, Jr., speaking for a government that very much wants a final decision soon on the mandate.
Verrilli had to take a bit of a tease that he was arguing on Monday that the mandate was not a tax but would be arguing on Tuesday that it was (a seeming anomaly for which the Solicitor General did have an explanation), but his basic plea to move on to decide what he called “issues of great moment” got a largely sympathetic hearing.
The Court talked about three different ways by which it might conclude that it had the power to rule, despite the 1867’s law flat language against any lawsuit that would seem to interrupt the collection of federal tax revenues. The first was to conclude that the AIA was not a court-closing law at all — that is, it did not take away a court’s jurisdiction to rule. The second was that the Act was intended to close the courts, but not to every kind of tax challenge. And the third was that it need not decide the jurisdictional question at all, since AIA does not even apply to a provision like the mandate and its attached financial penalty for not obtaining health insurance by the year 2014.
In order that tax lawsuits not be allowed to flood into the courts, threatening the Treasury’s revenue, if the AIA were not declared to be a complete bar, the Justices seemed content with the notion that federal judges would be very careful about the exceptions they made to the bar, and would only grant them “intelligently,” as Justice Antonin Scalia suggested. Justice Anthony M. Kennedy also indicated that federal judges would have the power to require a protesting taxpayer to try other remedies before being allowed into court to test the validity of a tax.
Although Long’s approach leaned heavily upon the very specificity of the lawsuit ban in the old law, it was the language of the new health care law that the Court found more compelling, beginning with the first question of the day, from Justice Scalia about how Congress intended for the new financial penalty to be collected by the federal government from those who don’t buy insurance. The new law does not make the collection work the same way as regular taxes are gathered, Scalia pointed out. The government would figure out how to do the collecting, Scalia said, but the courts could go ahead and decide cases challenging the validity of the assessment.
Long tried to show that, if the AIA did not apply to totally bar a tax lawsuit, the other administrative rules that put limits on how taxpayers can contest their tax bill would be wiped away, too, so there could be a wave of lawsuits seeking to stop the IRS from collecting the financial penalty from individuals who had refused to obtain insurance. But the Justices did not accept that that would necessarily follow, appearing to place considerable faith in federal judges to keep challenges in check.
Chief Justice Roberts soon turned to an issue which, he said, amounted to the “biggest hurdle” to Long’s plea for a complete bar to tax challenges. Going back to the Court’s ruling in the case of Helvering v. Davis in 1937, upholding the original Social Security Act, the Chief Justice noted that that involved a tax challenge and yet the government gave up its right to block that lawsuit. “So,” Roberts asked Long, “are you asking us to overrule the Davis case?”
Long said that case was decided at a time when the Court was issuing decisions allowing exceptions to the lawsuit bar, but the Court had stopped doing that in 1962, “so I would say, effectively, the Davis case has been overruled by subsequent decisions of this Court.”
The effect of the Chief Justice’s question was to draw the Justices into an exploration of how and when a system of waivers of the AIA limitation has worked and would work, and that turned the argument toward the conclusion that the AIA should not be interpreted as a flat bar, even if initially it were treated as a jurisdictional law controlling the power of the courts. Justice Elena Kagan said that the Court had in fact not followed a consistent pattern of treating the AIA as a flat bar, but rather as a bar from which there could be exceptions, where warranted in the interest of fairness.
Justice Sonia Sotomayor chimed in that she had found a number of cases where a waiver by the government had allowed a tax case to proceed. “Isn’t the fairer statement” about the precedents, she said, “that Congress has accepted that in the extraordinary case, we will hear the case?” Long said no, that Congress had steadily treated the AIA as a jurisdictional law.
Sotomayor also asked what “parade of horribles” would follow if the Court were to rule that the AIA did not work as a jurisdictional bar, but the Court was not impressed with his responses. Justice Scalia commented that there would not be a parade of horribles, because “you have an intelligent federal court deciding whether you are going to have an exception.”
Justice Stephen G. Breyer then entered the argument, saying that he was probably was leaning in favor of concluding that the AIA was a jurisdictional law, but that it would not apply since the mandate and its penalty were not a tax after all — the argument that the federal government is basically making in this phase of the health care case. Scalia quickly stepped back in, to argue that, for the Court to find that the old law was a ban on all court jurisdiction over tax challenges, Congress would have had to say so clearly, and “I find it hard to think that this is clear.”
As the argument moved along, Long’s argument seemed to lose more and more of its force with the Justices, and he appeared to have persuaded no one on the bench of his furthest argument — that the AIA was a total bar. Some of the Justices began picking up on arguments that the challengers had made against the AIA as a bar to their case — including the argument that they were challenging not the tax-like penalty, but only the underlying obligation to obtain health insurance. Justice Kagan suggested that Congress had intended (as the challengers argued) that the two were separate.
That mood then set the stage for Solicitor General Verrilli’s argument, and while the straddle he was advocating did not draw an enthusiastic embrace, the basic line of his reasoning seemed to be attractive to the Court — that is, that the Court should proceed to rule on the mandate.
As Verrilli began, he asked the Court to embrace that straddle — that is, to treat the AIA as a jurisdictional law because it seeks to protect the “financial stability of the federal government” with its reliance on tax revenues, but also to conclude that the mandate and penalty were a valid form of legislation passing under Congress’s taxing power. It did not label those provisions as a tax, but as a penalty, so the AIA does not apply.
It was Justice Samuel A. Alito, Jr., who immediately remarked that the government lawyer was arguing two different positions on the tax issue. Alito asked: “Has the Court ever held that something that is a tax for purposes of the taxing power under the Constitution is not a tax under the Anti-Injunction Act?” Verrilli said no, but said the two sides of his argument depended upon different types of analysis — the Tuesday argument keyed to the power to enact the mandate, and the Monday argument about how to read the new health care law’s language.
Justice Ruth Bader Ginsburg then offered Verrilli a chance to argue that the Court need not decide whether the AIA was jurisdictional in nature. She suggested that it need not face that issue as to other kinds of tax challenges, if it concluded that the mandate and penalty were not a tax. “The better route here,” Verrilli said, was to treat the AIA as not even applying, because he said it would be “very troubling” for the Court to decide that AIA was not jurisdictional. But he then told Ginsburg that the Court could avoid ruling on that point if it found that the health care law does not involve a tax subject to the AIA.
Justice Kennedy sought to bring him back to whether the government might have an interest in having some tax law issues decided by the courts, before they are enforced, so that it would waive the AIA even if it were jurisdictional. If the law is not a jurisdictional statute, the Solicitor General replied, then courts might start crafting exceptions to it. In addition, he said, it was also troubled that, if a government lawyer failed in a particular case to invoke the bar, it would be treated by the court as having been forfeited.
Justice Ginsburg retorted that the government would hardly be likely to overlook such a bar, and that “it seems to me that this is arming the government by saying it’s waivable at the government’s option.” Verrilli did not yield, saying that “is not our institutional assessment of the institutional interests of the United States.”
As Verrilli’s argument wound down, he did not seem to have persuaded many, if any, of the Justices that the proper way to go was to declare AIA jurisdictional, to get that issue settled, but to rule that it simply did not apply to the mandate and its penalty. But, before he sat down, several of the Justices began asking questions about the mandate itself, and they focused specifically on the challengers’ argument that the buy-insurance-or-pay-a-penalty approach was a way to turn people into lawbreakers, in order to be able to challenge the validity of the mandate.
Verrilli gave the government’s flat promise that no one would be treated as a lawbreaker if they did not obtain insurance, because the only consequence of that would be the assessment of the financial penalty, with no side-effects on any other situation in which that individual might be involved — such as a person on parole worried about refusing to buy insurance would mean he was violating the law and would have his release revoked.
The lawyer for the mandate’s challengers — the states and private small business owners — rose to argue just as the Justices were exploring other aspects of the mandate, including other arguments the challengers had made in their briefs. Their lawyer, Washington attorney Gregory G. Katsas, relied significantly upon a string of decisions by the Court in the last decade that cut down on the kind of law that would be treated as jurisdictional and thus as a flat bar to court consideration.
Justice Breyer tried, momentarily, to put the focus back on the threat to the government’s tax revenue if the Anti-Injunction Act were not found to be jurisdictional — at least for all except rare cases. “One thing that’s relevant in my mind,” Breyer said, “is that taxes are, for better or for worse, the life’s blood of government.” That, the Justice added, was why Congress had required people to try other remedies before they were allowed to go to court to challenge their tax bill. Katsas replied that, if Congress wanted to make a law jurisdictional to stop virtually all tax cases, it would have to say so explicitly, as the Court had indicated in recent years would be required to accomplish a jurisdictional bar.
Katsas, picking up on Chief Justice Roberts’ question about the government’s waiver of a bar to the lawsuit against the original Social Security Act, said that decision showed that “there may be some cases including, for instance, constitutional challenges to landmark federal statutes, where the government sensibly decides that its revenue-raising purposes are better served by allowing a party to come into court and waiving its defense.”
He also sought to employ the challengers’ argument that they were not challenging the financial penalty, but only the underlying mandate itself, because they were separate provisions. Butt that argument did not seem to gain any traction with the Court. Chief Justice Roberts told him bluntly: “The idea that the mandate is something separate from whether you want to call it a penalty or tax just doesn’t seem to make much sense….It’s sort of, well, what happens if you don’t fill the mandate. And the answer is nothing. It seems very artificial to separate the punishment from the crime.”
(The Court’s next argument on the health care law, a two-hour hearing on the mandate itself, begins at 10 a.m. Tuesday.)